Assume an Endogenous Growth Model with Labor Augmenting Technology and a Production

question 2

Multiple Choice

Assume an endogenous growth model with labor augmenting technology and a production function of the form Y = F(K,AN) , where A = 1.2(K/N) such that y = (1.2) k.If the rate of population growth is n = 0.06 and the rate of depreciation is d = 0.04, how large does the savings rate (s) have to be to achieve a per-capita growth rate of 8 percent?

• A)6%
• B)10%
• C)15%
• D)24%
• E)30%

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